Southeastern’s top pick continues to be Chesapeake Energy Corporation (NYSE:CHK), which makes up 8.2% of its 13F portfolio as of the end of the first quarter. Billionaire Carl Icahn is alongside Southeastern in Chesapeake Energy Corporation (NYSE:CHK) in battling for change at the company (see other activists owning Chesapeake).
Some positive news out of Chesapeake Energy Corporation (NYSE:CHK)’s recent quarterly results includes plans to close its $1 billion Mississippi Lime during the 2Q and sell off some Eagle Ford assets. With $5 billion in expected cash flow and $9 billion in planned CapEx, the company is seeing a $4 billion deficit that is to be funded with $4 to $7 billion in asset sales.
Taking sides
Dell Inc. (NASDAQ:DELL) is the fund’s second-largest holding, making up 7.8% of its portfolio. Dell Inc. (NASDAQ:DELL) has found itself in the middle of a battle between founder Michael Dell and billionaire Carl Icahn (see Icahn’s latest moves). Southeastern has sided with Icahn. Michael Dell has offered to take the company private for $13.65 per share, which Icahn and Southeastern believe undervalues the company.
However, the company must still find a way to hedge the PC market decline. Part of this will come from breaking into the tablet and mobile-device market. However, struggles appear to be afoot over the interim, with recent quarterly earnings for the April-ended quarter missing EPS consensus by 40%.
Diversified play
In third was the diversified holding company Loews Corporation (NYSE:L), which is 7.4% of Southeastern’s portfolio. The company owns almost a 90% stake in Cna Financial Corp (NYSE:CNA) and also owns a sizable stake in Diamond Offshore Drilling and Boardwalk Pipeline Partners.
Although low interest rates are expected to keep investment income down at Cna Financial Corp (NYSE:CNA), the rise in the oil and gas industry is expected to help counter a decline in revenue for Loews Corporation (NYSE:L). The oil and gas drilling and storage industry should be driven higher by a higher U.S. GDP. S&P expects GDP to come in at 2.7% for 2013 and 3.1% for 2014.
The EIA also estimates that liquid fuels consumption decreased 2.1% in 2012, but will rebound by 0.4% in 2013. Loews Corporation (NYSE:L) is also trading just below book value, and with the company’s solid prospects in the oil/gas industry it could easily be a buy for investors.
Growing subscribers
DirecTV (NASDAQ:DTV) comes in at fourth and makes up 7.3% of the fund’s 13F. S&P expects DirecTV to add some 4 million subscribers in both 2013 and 2014, helping boost total U.S. customers to 20.4 million by 2014 end. Part of this will come from higher Latin America growth.
The Latin American segment saw the most growth across DirecTV (NASDAQ:DTV)’s segments last quarter, with revenue up 22% year-over-year. Subscriber growth was up 31% at the end of 2012. DirecTV (NASDAQ:DTV) is trading cheaply at around 10 times forward earnings, compared to Dish Network’s 17 times. DirecTV is also one of billionaire Warren Buffett’s top picks (check out Buffett’s portfolio).
